The Crypto clinic – The Portugal News

The Crypto clinic – The Portugal News

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May 24, 2022 by Coinvasity
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Stephen Whitelaw answers your CryptoCurrency questions By Stephen Whitelaw, in Crypto · 23 May 2022, 08:03 · 0 Comments Question: I’ve heard the terms AML/KYC/CFT being used – what do they mean?Answer: Know Your Customer (KYC), Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) are processes that a company (e.g. a bank or
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Stephen Whitelaw answers your CryptoCurrency questions
By Stephen Whitelaw, in Crypto · 23 May 2022, 08:03 · 0 Comments
Question: I’ve heard the terms AML/KYC/CFT being used – what do they mean?
Answer: Know Your Customer (KYC), Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) are processes that a company (e.g. a bank or crypto currency exchange) must comply with to help prevent, detect and report suspicious financial activities. For example all America banks (under the Bank Secrecy Act of 1970) must report cash deposits of more than $10,000 USD, banks in the European Union have also adopted similar measures.
Essentially they are mechanisms to help combat money laundering and terrorism financing.
If you were to sign up for a cryptocurrency exchange today, you will soon know what KYC means when you are asked for your name, address, date of birth, passport, drivers licence, recent utility bills and a blood sample – only joking about the blood sample – but it does sometimes feel that it is the only thing they do not ask for. (yet!)
Over the last few years a number of decentralised cryptocurrency exchanges have appeared which do not require KYC! e.g. Bisq, CoinEx, Kucoin & HODL HODL.
Question: What is the blockchain?
Answer: Blockchain is the distributed database technology that is used by almost all cryptocurrencies. It distributes identical copies of a database across a network and as such the blockchain makes it very difficult to hack, in fact it is considered immutable (a fancy word meaning you cannot change what has been written to the blockchain). So in summary a blockchain is a growing list of records, called blocks, that are linked together using cryptography. The blockchain grows in size over time and I’ve just checked the size of the bitcoin blockchain which is currently over 420 Gigabytes in size!
The aim of any blockchain is to allow information to be recorded and distributed, but not edited in any way. The blockchains behind cryptocurrencies are records of transactions that cannot be altered, deleted, or destroyed. This is why blockchains are also known as a distributed ledger technology (DLT) and are being used a huge number of areas and not just finance. It is also worth mentioning that most of the blockchains in existence are private blockchains where you need to be invited to participate – these are known as permissioned blockchains.
Question: Are exchanges a safe place to store my cryptocurrency?
Answer: Looking back over the last 11 years there have been a large number of successful hacks carried out of cryptocurrency exchanges – see https://bringbackmycrypto.com/blog/exchangehacks for a list of over 60 hacks and the amount stolen including the famous Mt Gox hack in 2014.
The exchanges (e.g. Coinbase, Binance, Kraken etc.) are certainly the easiest on ramps to buy and sell cryptocurrencies – however they are juicy targets for criminal hackers as they hold huge amounts of funds on behalf of their customers. If you decide to leave funds on any of the exchanges check to see if they offer cold storage, two-factor authentication or even insurance which all help you feel a lot safer and reduce the chances of your cryptocurrencies vanishing into thin air.
The best advice given by most cryptocurrency investors is not to leave large amounts of funds on the exchanges and instead to transfer them to your local cold storage e.g. a Trezor or Ledger wallet. However you must educate yourself and be aware that you are now 100% responsible for your funds, so you should probably choose a wallet that offers 12/24 word recovery phrase, password facility and backups.
Email your questions to crypto@theportugalnews.com
By Stephen Whitelaw (https://bringbackmycrypto.com)
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